$30 off During Our Annual Pro Sale. View Details »

merpay-overview_en

Mercari, Inc.
September 16, 2022

 merpay-overview_en

Mercari, Inc.

September 16, 2022
Tweet

More Decks by Mercari, Inc.

Other Decks in Business

Transcript

  1. 1 As of October 2022

  2. 2    Company Overview November 20, 2017 Established Tokyo, Osaka,

    Fukuoka Offices Establishing new finance-related businesses Business Activities
  3. 3    Leadership Representative Director, CEO Masato Yamamoto Formerly Head

    of Partner Sales at Google Japan Enterprise, and Head of Apple Pay Merchant Business at Apple Japan Director, CISO Keisuke Sogawa Formerly CTO of WebPay, Inc. Director Naoki Aoyagi Formerly worked at Deutsche Bank, and CFO, US corporation CEO, and general manager at GREE Director, CFO Sayaka Eda Formerly Managing Director at Goldman Sachs Japan Co, Ltd. Director, CRCO Akira Inoue Formerly Senior Managing Director and Head of Internal Control at SMBC Nikko Securities Inc. Director Kyosuke Nobukawa Formerly worked at Sumitomo Mitsui Card Co., Ltd.
  4. 4    VP of Engineering Hideo Kimura Formerly Platform Department

    Executive Officer in the Japan region game business headquarters of DeNA Co, Ltd. as well as System Division Executive Officer Vice President, COO Takeo Iyo Formerly Head of Product Division at Mercari Vice President, CPO Mayumi Narisawa Formerly Head of Design at Merpay Vice President, CTO Takashi Nozawa Formerly Technical Director at Origami Inc. Leadership VP of Engineering Shogo Sensui Launched Merpay’s Frontend Team and led the redesign of Mercari Web VP of HR (Fintech) Ryo Umezawa As HR Director, oversaw a wide range of work to establish the company’s general HR functions like hiring, labor management, and HRBP
  5. 5    VP of Trust and Safety Takaaki Shinohara Formerly

    Head of Product at Souzoh VP of Growth (Fintech) Takeshi Nagasawa After being in charge of growth for the mobile payment service Merpay, now oversees growth for Mercari Group’s fintech operations Leadership
  6. 6 Mission

  7. 7    What is Merpay? Merpay is a mobile payment

    service operated by Merpay, Inc., that can be used within the Mercari marketplace app. This service enables users to utilize their Mercari sales balance1, funds added to their Merpay balance from their regular bank account, or the BNPL (buy now, pay later) Merpay Smart Payments service to pay for purchases at physical stores and online with their smartphone. Merpay supports both iD contactless payments and code payments and can be used at convenience stores, restaurants, drug stores, fast food chains, and other stores across Japan. 1. In order to use Mercari sales balance, users must configure certain settings or use their sales balance to purchase Mercari points. 2. ”iD” is a registered trademark of NTT DOCOMO, INC.
  8. 8    Mercari and Merpay’s “Circular Finance” The addition of

    Merpay to Mercari’s item lifecycle creates a circular relationship between users’ items, money, and credit, facilitating the growth of “circular finance” that grants users greater freedom and flexibility. It provides users with a valuable, uniquely Mercari experience. Shipping Goods Money Transaction History Credit Information Payment Credit Merpay Smart Money Fixed-amount payment Aiming to achieve their dreams Sales
  9. 9    Merpay’s Three Focus Areas • Merpay Smart Payments

    provides lump-sum payment, which allows the user to repay all at once the following month, and fixed-amount payment, which lets the user pay in installments over several months • Small-sum loan service Merpay Smart Money   • Services allowing users to use their Merpay balance for asset management and more. In the future, Merpay plans to work with Mercoin to offer a service allowing users to purchase cryptoassets using their sales balance Payment Credit Growing Wallet Lump-Sum Payment Fixed-Amount Payment Asset Management Pay for everyday purchases all at once the following month Splurge a little now and pay over several months at a fixed amount of your choice • Various payment methods available: iD payment, code payment, and virtual card iD Code Hold your phone over a reader Scan a code Virtual Card Input a number 1. Launched August 3, 2021 Borrow when needed and repay flexibly: interest rates fluctuate depending on the borrower's usage of Mercari Merpay Smart Money1
  10. 10    Merpay’s Three Focus Areas • Merpay Smart Payments

    provides lump-sum payment, which allows the user to repay all at once the following month, and fixed-amount payment, which lets the user pay in installments over several months • Small-sum loan service Merpay Smart Money   • Services allowing users to use their Merpay balance for asset management and more. In the future, Merpay plans to work with Mercoin to offer a service allowing users to purchase cryptoassets using their sales balance Payment Credit Growing Wallet Lump-Sum Payment Fixed-Amount Payment Asset Management Pay for everyday purchases all at once the following month Splurge a little now and pay over several months at a fixed amount of your choice • Various payment methods available: iD payment, code payment, and virtual card iD Code Hold your phone over a reader Scan a code Virtual Card Input a number 1. Launched August 3, 2021 Borrow when needed and repay flexibly: interest rates fluctuate depending on the borrower's usage of Mercari Merpay Smart Money1
  11. 11    Merpay Number of users1 Number of merchants (including

    locations scheduled to implement Merpay)2 1. Total number of unique users who are registered for Merpay Electronic Money, or used Merpay Code Payments, Online Payments, Merpay Smart Payments, etc. as of Jun. 30, 2022. 2. As of June 30, 2022 (merchants with both iD/QR counted once only; including locations scheduled to implement Merpay) The mobile payment service Merpay launched in February 2019 13.94 million 2.63 million Number of supported financial institutions Over 300
  12. 12    Payment Service Fee for Merchants We began applying

    a 2.6% payment service fee to Merpay usage from July 1, 2021. 1. Merpay: Applied a 2.6% merchant service fee to Merpay usage from July 1, 2021. d Payment: Merchants who apply online between August 1, 2022, and September 30, 2023, are eligible for a promotion posted on d Payment’s website. For information about the previous promotion offering no merchant fees for d Payment, see the promotion information on the website. 2. Exceptions may apply. No start-up or fixed fees All you need is a smartphone. No monthly fees. All you pay is service fees on each payment. A service that lightens the burden on merchants.2 Stop worrying about service fees yen Essentially free1 about docomo’s d Payment service.
  13. 13    Integration with NTT DOCOMO In the beginning of

    September 2020, Merpay and DOCOMO launched use of a shared QR code between Merpay and DOCOMO’s d Payment service and worked together to promote implementation Merpay Merchants (Helping Introduce Cashless Payments to Small- to Medium-Sized Merchants) Promoted implementation in regional areas through Shinkin Central Bank In January 2020, Origami Inc. joined Mercari Group through Merpay’s acquisition of Origami shares, and Mercari and Merpay concluded an agreement for a business alliance with Shinkin Central Bank We have promoted the introduction of Merpay to small- to medium-sized local businesses and conducted Mercari Workshop sessions as well, aiming to create the kind of highly sustainable circular economy where users can take the money obtained from selling unneeded items on Mercari and channel it into these communities with Merpay. By placing just one QR code at the register, merchants can expect to welcome users of both the Merpay and d Payment mobile payment services. This reduces the burden on merchants and increases the impact of cashless payment on their business.
  14. 14    Building a Primary-Secondary Distribution Cycle with Mercari and

    Merpay Receives sales proceeds/charges balance Receives item Mercari Group’s services form a sustainable cycle in which users sell things they no longer need on Mercari (secondary distribution) and use the resulting sales proceeds to shop at physical and online stores (primary distribution) through Merpay. Sells things they no longer need on Mercari Buys new things using Mercari sales balance
  15. 15    Initiatives With Offline Merchants Trials underway with merchants

    to strengthen synergy between Merpay and Mercari 1. These initiatives are proofs of concept available at select locations. Introducing Merpay code payment Selling Mercari packing materials Installing Mercari Post mailboxes Expanding the user experience by implementing Merpay, selling packing materials, and installing Mercari Post mailboxes White Express Daiso
  16. 16    Initiatives With Online Merchants— Strengthening Collaboration with Mercari

    Released a feature in March 2020 that allows users to easily list items on Mercari using their Online Payments purchase history Purchase online with Merpay List on Mercari with just one tap Receive sales proceeds
  17. 17    Merpay’s Three Focus Areas • Merpay Smart Payments

    provides lump-sum payment, which allows the user to repay all at once the following month, and fixed-amount payment, which lets the user pay in installments over several months • Small-sum loan service Merpay Smart Money   • Services allowing users to use their Merpay balance for asset management and more. In the future, Merpay plans to work with Mercoin to offer a service allowing users to purchase cryptoassets using their sales balance Payment Credit Growing Wallet Lump-Sum Payment Fixed-Amount Payment Asset Management Pay for everyday purchases all at once the following month Splurge a little now and pay over several months at a fixed amount of your choice • Various payment methods available: iD payment, code payment, and virtual card iD Code Hold your phone over a reader Scan a code Virtual Card Input a number 1. Launched August 3, 2021 Borrow when needed and repay flexibly: interest rates fluctuate depending on the borrower's usage of Mercari Merpay Smart Money1
  18. 18    Merpay Smart Payments— A Credit Service Based on

    “Trust” Deferred payment is not available to users under the age of 18. Users 18 or 19 years of age have an upper usage limit of 50,000 yen. Fixed-amount payment is not available to users under the age of 20. Total usage limit for deferred payments + fixed-amount payments is 500,000 yen. • Smart Payments enables users to pay for purchases later, with the credit limit determined by their Mercari usage history. • The service also allows users to set their own usage limit and check their usage history, so they can manage their payments themselves. • Smart Payments provides flexible deferred payment/fixed-amount payment options, allowing users to adjust repayment amount at any time.
  19. 19    How Merpay Thinks of "Trust" We measure “trust”

    based not on who people are, but on what they have done. Length of employment Address Income Occupation Family structure
  20. 20    Mercari's Unique Data We determine whether a user

    will uphold their promise to repay based on their unique transaction data from Mercari. In this way, we can build trust, creating a new form of credit for the user. Notifies about completed payment Reviews Receives sales proceeds Purchases/pays to Reviews Sends Lister Buyer
  21. 21    Increasing Opportunities to Expand AI Credit, the Core

    of Deferred Payment Services In April 2021, the Installment Sales Act was partially revised, allowing AI to be used to determine credit rather than traditional credit systems. As a result of the new system, business operators began offering small-sum deferred payment services, accelerating the momentum of deferred payment services in Japan. Aug 2021 Merpay acquired AI credit certification - Merpay acquired the first certification on August 27, 2021 - This enabled Merpay to calculate how much a user could affordably be expected to pay based on data such as Mercari usage history Apr 2021 Bill to revise the Installment Sales Act announced A bill to partially revise the Installment Sales Act was ratified by the cabinet in March 2020 and announced in June of the same year Revised Installment Sales Act enacted The revised Installment Sales Act defined the following two points, among others: 1. Introduction of regulations for small-sum deferred payment made in installments 2. Allowance for enhanced screening methods This introduced a registration system for business operators providing small-sum (100,000 yen or less) deferred payment services and enabled the use of AI for credit screenings instead of traditional screenings to determine the amount a user is likely to be able to pay.
  22. 22    Visualization of Usage Status and Flexible Payment Methods

    Displays the amount of time until repayment is complete, as well as the monthly payment amount and fees Enables flexible payments + Can use Mercari sales balance + Can pay whenever you want + Can adjust the payment amount after purchase Visualizes usage status Allows users to create a payment schedule that reasonably fits with their lifestyle
  23. 23    About 60 percent of users set their upper

    credit limit themselves 1. Credit limit statistics refer to the status as of the end of February 2022; payment status statistics refer to the percentage of payments unpaid as of the end of February 2022 2. Payment status of users of Merpay Smart Payments between April and September 2020, as of the end of September 2021 The percentage of Merpay Smart Payments users who have set their upper credit limit and the first-month overdue payment rate1 Overdue payment rate is 1/4 Upper Credit Limit Settings and Payment Rate Users who have set their upper credit limit Over 99% of users have already paid off the amount they used Steady low unpaid rate There is also a correlation between credit limit setting and payment status Set Not set
  24. 24    Deferred Payment Service Usage 30% of people use

    deferred payment services. This number tends to be particularly high in younger age groups. (Merpay, October 11, 2021: “Survey on Consumption and Payment Methods” (https://jp.merpay.com/news/2021/10/202109bnplsurvey/)) Over 70% of deferred payment service users have a credit card
  25. 25    Strengths of Deferred Payment Services Compared to other

    payment methods, smartphone-based deferred payment services excel in both usage and payment management features. Right away Can see payments right away from a smartphone Usage history automatically updated Automatically withdrawn on a designated date Can choose a payment date Can only check online statements several days later Requires manual management, like recording payments separately Immediately reflected in balance Can check balance history Cash Debit cards Credit cards Smartphone deferred payment services Payment timing Confirmation/ management of use
  26. 26    Users of deferred payment services are more interested

    in managing their finances Users Choose Deferred Payment for Ease of Management With credit cards, it’s easy to overuse them. Deferred payment services have the advantage of both usage and payment being easy to manage (Merpay, October 11, 2021: “Survey on Consumption and Payment Methods” (https://jp.merpay.com/news/2021/10/202109bnplsurvey/))
  27. 27    User Examples A woman in her 30s A

    woman in her 20s Mainly uses deferred payment services Frequently makes large payments when shopping for contact lenses, clothes, food, etc. + It’s easy for her to visualize her usage + She can carefully manage payment amounts and timing herself Uses Merpay Smart Payments for everything Uses iD contactless payment at physical shops and the virtual card online + When she exceeds her personal budget, she can adjust her budget by selling things she no longer needs + She can see her history for buying and selling things all on the same app Main payment method Usage scenarios Reasons for use
  28. 28    • In August 2021, we launched Merpay Smart

    Money, a small-sum loan service that Mercari users can apply for within the Mercari app and that utilizes Mercari usage history to determine a user’s interest rate and borrowing limit • The service focuses on not only providing appropriate credit, but making that credit balance easy to repay, allowing users to repay using their Mercari points/sales balance and change their monthly repayment day, repayment amount, and other repayment plan details within the app Merpay Smart Money—Small-Sum Loan Based on Mercari Usage     Maximum borrowing limit is 200,000 yen. Interest rate and borrowing limit are determined through a screening process based on the user’s Mercari usage history. Not available to users less than 20 years of age or over 70 years of age.
  29. 29    Interest and Borrowing Limits Matched to Mercari Usage

    Based on the user’s Mercari usage history, the borrowing limit can be set anywhere from 1,000 yen to 200,000 yen, with the interest rate between 3.0%–15.0%
  30. 30    Key Features of Merpay’s Safe and Secure Credit

    Services Credit based on Mercari usage history Flexible payment methods Visualizes usage status Mercari sales balance We also have a dedicated team working daily to improve quality of the service, and we’re working to incorporate external experts’ opinions regarding provision and administration of the service
  31. 31    Merpay’s Three Focus Areas • Merpay Smart Payments

    provides lump-sum payment, which allows the user to repay all at once the following month, and fixed-amount payment, which lets the user pay in installments over several months • Small-sum loan service Merpay Smart Money   • Services allowing users to use their Merpay balance for asset management and more. In the future, Merpay plans to work with Mercoin to offer a service allowing users to purchase cryptoassets using their sales balance Payment Credit Growing Wallet Lump-Sum Payment Fixed-Amount Payment Asset Management Pay for everyday purchases all at once the following month Splurge a little now and pay over several months at a fixed amount of your choice • Various payment methods available: iD payment, code payment, and virtual card iD Code Hold your phone over a reader Scan a code Virtual Card Input a number 1. Launched August 3, 2021 Borrow when needed and repay flexibly: interest rates fluctuate depending on the borrower's usage of Mercari Merpay Smart Money1
  32. 32    We started an initiative allowing users to use

    their Merpay balance on the peer-to-peer investment service Funds. The first fund was released in November 2020, the second in January 2021, and the third in August 2021, with all three selling out in less than one minute. By allowing users to sell unneeded items on Mercari and use the resulting sales proceeds for asset management on Funds, this initiative expands the user experience for both Mercari and Merpay. Mercari Sustainability Fund on Funds
  33. 33

  34. 34    Efforts to Ensure a Safe and Secure Product

    We implement measures to prevent fraud in order to ensure a safe and secure user experience. Compensation/ support provided in case of an incident Monitoring conducted 24/7 Authentication and identity verification at time of registration and use
  35. 35    AI/visual check Merpay identity verification (eKYC) Identity verification

    via ID + selfie KYC using Individual Number Card (JPKI) Fraud coverage Registering for Mercari Connecting to financial institutions Anti-fraud countermeasures employed in the process from account creation to bank account connection/service use 1. Two-factor authentication (SMS) 2. Identity verified against name on bank account 3. Anti-fraud monitoring when charging from bank/using Merpay 4. Total coverage in the event of an incident Transferring funds from bank to Merpay Using Mercari/Merpay Ensuring a safe and secure environment has remained a priority for Merpay. We have implemented identity verification and anti-fraud countermeasures, as well as strengthened identity verification measures (eKYC). The number of Merpay users who have completed identity verification (eKYC) has increased dramatically, helping Merpay become the first payment service to resume new connections and bank charging with financial institutions that had suspended such connections from November 2020 onwards, such as Japan Post Bank, Gunma Bank, Tochigi Bank, and Nagano Bank. Efforts to Ensure a Safe and Secure Product
  36. 36    Efforts to Ensure a Safe and Secure Product

    In March 2021, we launched an identity verification process that uses Japan’s public Individual Number Card identification system (JPKI). Merpay is the first mobile payment service provider to implement identity verification using JPKI. Due to efforts to strengthen eKYC and promote identity verification, Merpay reached 12.16 million identity-verified accounts as of Sep 30, 2022. Percentage of identity-verified users: 87.2% 12.16 million users Simple KYC using official identification (Individual Number Card) A first in the payment industry Individual Number Card Verification
  37. 37    Mercari Group’s “Circular Finance” The addition of Merpay

    to Mercari’s item lifecycle creates a circular relationship between users’ items, money, and credit, facilitating the growth of “circular finance” that grants users greater freedom and flexibility. It provides users with a valuable, uniquely Mercari experience. Shipping Goods Money Transaction History Credit Information Payment Credit Merpay Smart Money Fixed-amount payment Aiming to achieve their dreams Sales
  38. 38    Appendix: Growth of Features/Services Since Merpay’s Launch Feb–Mar

    2019 iD Payments/ QR Code Payments Available at 2.64 million iD and Merpay merchants nationwide, including convenience stores, restaurants, drug stores, and fast food (As of March 31, 2022 (merchants with both iD/QR counted once only)) Jul 2020 Merpay Smart Payments Allows users to defer payment for items based on past usage of Mercari and Merpay Online Payments Enables use of Merpay for not only offline purchases, but online as well Sep 2020 Send/receive Enables users to send their Merpay balance/points to family and friends No-contact service Apr–May 2019 Growing Wallet Enables users to utilize their Merpay balance on the peer-to-peer investment service Funds Nov 2020 Mar 2021 Shared d Payment/Merpay QR code Enables use of single QR code for both d Payment and Merpay Virtual Card Enables users to easily issue a card number which can be used to pay using Merpay balance at many online stores Identity verification using Japan’s Individual Number Card (JPKI) Support for identity verification using Japan’s public Individual Number Card identification service (JPKI) Merpay Smart Payments (fixed-amount) Allows for fixed-amount payments, whereby users pay in installments from the following month onwards Mercari Donation Enables donation of Merpay balance, charged from Mercari sales balance or bank account, etc., to local governments and other organizations of the user’s choice Merpay Smart Money Aug 2021 A small-sum loan service that Mercari users can apply for within the Mercari app and that utilizes Mercari usage history to determine a user’s interest rate and borrowing limit
  39. 39    History: Merpay Merpay, Inc. established Support for iD

    contactless payments Added support for code payments and released the coupon feature Reached 1 million users of Merpay Electronic Money Released Merpay Smart Payments (formerly Merpay Deferred Payment) Released Online Payments feature Reached 2 million users of Merpay Electronic Money  Reached 4 million Merpay users Reached 5 million Merpay users Business alliance with Shinkin Central Bank concluded; reached 6 million Merpay users Origami Inc. joined Mercari Group; Mercari, Merpay, and NTT DOCOMO agreed on partnership Reached 7 million Merpay users Fixed-amount payment and sending/receiving features released Began providing a shared QR code for d Payment and Merpay Reached 8 million Merpay users Nov 2017 Feb 2019 Mar 2019 Apr 2019 May 2019 Jun 2019 Sep 2019 Oct 2019 Jan 2020 Feb 2020 Jun 2020 Jul 2020 Sep 2020 Oct 2020
  40. 40    History: Merpay First stage of the Growing Wallet:

    Merpay available for use on Funds Became the first service in the industry allowed to resume the bank connections that were suspended due to fraud cases (Resumed connections with Japan Post Bank in January) Reached 8.5 million Merpay users Began providing a “virtual credit card” that can be used to pay for purchases on online stores with Merpay Smart Payments Became the first service in the industry to support KYC using the IC chips in Individual Number Cards Reached 9.8 million Merpay users Reached 10 million Merpay users Launched small-sum loan service Merpay Smart Money Nov 2020 Dec 2020 Mar 2021 Apr 2021 Aug 2021